Mr. Robert Watt:

What we have been doing is managing our affairs in a way that enables us to increase capital spend significantly. We will increase it by 70% between last year and 2021. That is the main thing that we are doing.

No matter what the rules are, we will need to manage our affairs in a way that will place a constraint on our amount of current and capital spending. We must decide on whether to fund capital by borrowing within the rules or by increasing taxation within the rules. That is possible for us. There is no bar on the Government deciding that it wants to fund more capital or current spending within the fiscal rules by taxing people or generating the revenue. As constructed, the rules count capital spending the same way as other spending apart from the smoothing rule, of which the Deputy will be aware and under which an increase in spending of, for example, €100 million would only use up €25 million of the fiscal space in any given year and the full amount by the end of the four-year period. There is an issue in terms of capital smoothing.

The only change to the fiscal rules that would make a difference would be if it was decided at EU level that capital would be treated in a different way so that governments would be allowed to balance current spending and borrow for capital purposes, which is the so-called golden rule. That differs from the approach that underpins our current rules.